How to pay National Insurance when self-employed or running a business

What does National Insurance pay for?

National Insurance payments are a legal requirement and have been in place for over 100 years.

As well as qualifying you for benefits such as the state pension, the money raised through National Insurance is used to fund public services such as the NHS, welfare, and education.

How is National Insurance calculated?

National Insurance is broken down into different ‘classes’. The class you pay depends on your employment status:

• Class 1 – employees earning more than £242 a week and under the state pension age pay Class 1 contributions, which are deducted by the employer (you’ll also pay this if you’re both self-employed and employed)
• Secondary Class 1 – if you employ people, you pay secondary Class 1 contributions on your employees’ earnings
• Class 2 and Class 4 – self-employed people pay National Insurance in these two classes (Class 2 NICs were abolished in April 2024 but continue on a voluntary basis)
• Class 3 – this is a voluntary National Insurance you can use to fill any gaps in your contributions so you can qualify for a state pension

How to pay National Insurance contributions

Most self-employed people pay National Insurance through their annual Self Assessment tax return. The deadline to file your return and pay your bill is 31 January each year.

This means you pay National Insurance in arrears. We list the rates and thresholds for both the current and the previous tax year below.

Some self-employed people might pay National Insurance differently:

• you won’t pay NICs if you’re under 16, or over the state pension age (unless you pay Class 4 NICs, which you stop paying at the end of the tax year in which you reach state pension age)
• you won’t have to pay Class 2 NICs if you’re a married woman who opted into the Reduced Rate scheme before it ended in April 1977
• separate rules apply to share fishermen and volunteer development workers

Some self-employed people don’t pay National Insurance contributions through Self Assessment, but they may choose to make voluntary contributions. These workers include:

• examiners, moderators, and invigilators
• religious ministers, providing that they receive no salary or stipend
• people who make investments, but without receiving a commission or fee, and not as a business
• some people whose business involves land or property

Self-employed National Insurance rates 2024-25

If you’re self-employed and your profits are more than £12,570 a year, you’ll need to pay Class 4 NICs.

What is Class 4 National Insurance?

For the 2023-24 tax year, the Class 4 National Insurance percentage was nine per cent if your profits were between £12,570 and £50,270. It was charged at two per cent on profits over £50,270.

For the 2024-25 tax year, the initial rate has been lowered from nine per cent to six per cent.

Class 4 NICs	2023-24	2024-25
Self-employed people start paying above	£12,570	£12,570
A lower rate above	£50,270	£50,270
Initial rate	9%	6%
Rate above £50,000	2%	2%

What is Class 2 National Insurance?

As mentioned above, the self-employed no longer need to pay Class 2 NICs, but can make voluntary payments. They’ll continue to get full access to entitlements such as state pension and credits.

Class 2 National Insurance contributions are fixed at £3.45 a week.

When do you start paying National Insurance?

Paying National Insurance is mandatory for anyone over 16 who’s:

• self-employed with an annual profit of more than £12,570
• employed and earns more than £242 a week

If you don’t meet these criteria, it’s unlikely you’ll need to pay National Insurance but you may still benefit from things like the state pension.

When do you stop paying National Insurance?

Whether employed or self-employed, most people stop paying NICs when they reach the state pension age.

This means that most men and women will stop paying National Insurance at 66, rising to 67 from 2028. 

As mentioned above, the self-employed have stopped paying Class 2 NICs since April 2024.

Voluntary National Insurance self-employed contributions

You can choose to make voluntary National Insurance contributions. You might do this if there are gaps in your National Insurance record that could affect your entitlement to the state pension, or if you had small profits during periods of self-employment.

If you’re concerned that there may be gaps in your National Insurance record, you can use the government’s National Insurance record check to find out where you stand. You can then check whether you’re eligible to make voluntary contributions.

How can I get a National Insurance refund?

If you think you’ve overpaid your National Insurance or shouldn’t have paid it at all, you can claim a refund from HMRC.

Self-employed people are more likely to overpay National Insurance because their employment circumstances are more complicated than employed people paid through Pay As You Earn (PAYE).

HMRC doesn’t check the accuracy of the NICs you make, so it’s important for you to check that you’re not overpaying and apply for a refund if you’re due one.

For example, a self-employed person could be overpaying NICs if their profits were under the small profits threshold or if they have several jobs, meaning they’re employed and self-employed at the same time.

When you request a National Insurance tax refund, you’ll be asked which class of NICs you want refunded (Class 1, Class 2, Class 3, or Class 4).

You can work out what NICs you need to pay and what you could be owed by using a National Insurance refund calculator.

Claiming a Class 2 refund

If you want to claim a refund for Class 2 contributions that you don’t think you should have paid, you’ll need to fill out a CA8480 form.

If you think you’ve paid too much Class 2 National Insurance, you’ll need to write to HMRC with: 

• a copy of your earnings
• your National Insurance number 
• why you think you’ve overpaid 
• the tax year you’re claiming for

Claiming a Class 4 refund

If you want a repayment of Class 4 contributions that you don’t think you should have paid, you’ll need to contact the Self Assessment Helpline within five years of the tax year you want a refund for.

If you think you’ve paid too much Class 4 National Insurance, you’ll need to fill out a CA5610 form from 1 February in the tax year after the one you’re claiming for.

What National Insurance contributions do employers make?

On behalf of your employees, you deduct National Insurance from their pay on earnings between the primary threshold (£1,048 monthly or £242 weekly) and the upper earnings limit (£4,189 monthly or £967 weekly).

For the 2024-25 tax year, the main rate of employee National Insurance is eight per cent. The upper earnings limit remains at two per cent.

These are your employees’ Class 1 National Insurance contributions.

How much National Insurance your employees have to pay is worked out by the category letter assigned to their National Insurance number. Find out more about category letters on the government website.

Make sure you claim the employment allowance, which reduces your annual National Insurance liability by £5,000 a year.

Is there anything else you’d like to know about how to pay National Insurance? Let us know in the comments below.

More small business tax guides

• A guide to income tax for the self-employed
• IR35 support and guides for contractors
• A guide to UK corporation tax for small businesses
• How does VAT affect businesses in the UK